recent government policies to shore up low prices for domestic natural rubber.

We believe most positive factors have been priced in. Moreover, demand from China has yet to recover and excess supply continues to put pressure on natural rubber prices.

4Q18F – Natural rubber prices unlikely to recover yet

We think that natural rubber prices remained weak due to

excess supply as a result of the high number of trees planted in 2010-2012,

lower demand from China due to trade tensions and rising stockpiles in Qinqdao and in the Shanghai Futures Exchange (SHFE) rubber stocks, and

short-term policies by the Thai government (15 Dec 18- 16 Jan 19) to increase domestic natural rubber consumption, which should have a minimal impact on operations as STA exports more than 80% of total output.

Acquisition could increase glove capacity in 2Q19F

Sri Trang Agro-Industry is expected to manufacture 17.2bn gloves in FY18F and it plans to acquire ThaiKong (TK, unlisted), which will add another c.4bn gloves p.a. If the acquisition goes through, Sri Trang Agro-Industry will have production capacity of c.21.2bn gloves p.a.

Stock analysis research and articles on this site are for the purpose of information sharing and do not serve as recommendation of any transactions. You will need to make your own independent judgment regarding the analysis. Source of the report is credited at the end of article whenever reference is made.